Mayor Passes $588 Million Tax Increase: Launches 2019 Campaign

During the darkest hours of Mayor Emanuel’s runoff campaign, he worked hard to downplay the looming property tax hike that many insiders knew was inevitable. Last Wednesday, that inevitability became reality when the Chicago City Council passed Mayor Emanuel’s $588 million tax increase. In addition, the City Council passed a much maligned garbage pick up fee that will cost Chicagoans approximately $9.50 extra monthly. Many assumed the inevitability of that massive tax increase and the impending voter backlash is what led Emanuel to declare during his 2014 campaign, that this would be his last term.

Mayor Rham Emanuel

But, in what was an unexpected turnabout, immediately following the passage of the historic tax increase, Emanuel announced that he was planning on running for a 3rd term. Perhaps he was emboldened by passage of the tax increase, maybe he has given up his national aspirations after becoming damaged goods in Chicago’s first ever mayoral runoff. Maybe it could be the lack of a credible challenger on the horizon. Regardless of the circumstances, Emanuel got his tax increase, and Chicago has its Mayor for the foreseeable future.

But according to Danielle Stanley, Research Assistant at the Center for Budget and Tax Accountability, Chicagoans are not in the clear. As previously reported in the Chicago Defender, a significant part of the solution relies on a dysfunctional Springfield that has not been able to solve it’s own budget issues.

“In the spring of 2015, the General Assembly passed Senate Bill 777 (Cullerton/Currie), which changes the 2010 law and reduces the City’s required contributions to the police and fire pension funds. If SB77 is not signed into law, the city will need other funding/revenue options,” Stanley said.

While Mayor Emanuel and Governor Rauner are known friends and associates, the budgetary crises at the state and local levels have strained the relationship between the two men, with Emanuel calling for Rauner to “Stop name calling and do your job!” To which Rauner rebutted with an offer to send Emanuel some dead frozen fish in a not so veiled reference to Emanuel’s past election antics. Regardless, Emanuel will need Springfield to fix his budget.

Assuming the two can get their act together approximately 62% of the tax increase will go to shore up police and fire pensions and 31 percent will go to debt service. According to Stanley, “The city is responsible for paying the employer contribution for the Firemen’s Annuity and Benefit Fund of Chicago, the Laborers’ Annuity and Benefit Fund of Chicago (LABF), the Municipal Employees’ Annuity and Benefit Fund of Chicago (MEABF), and the Policemen’s Annuity and Benefit Fund of Chicago. Three of the four city pension funds have a current funded ratio below 50 percent.”

She continues, “In 2010, Governor Quinn signed into law PA 96-1495 which created tier II of pension benefits for public employees hired after January 1, 2011. The legislation also created a new funding plan for police and fire funds, which required the City to begin putting more money in those funds starting in FY2015. The total amount the City should have budgeted to contribute to all four pension funds for FY2015 was $1.1 billion. However, the City only budgeted for $557 million.“

So the question remains, how will Chicagoans respond to such a large tax increase, when the funding goes to pay old bills with limited new services. Stanley says the taxes and fees collected would, “bring an additional $125.3 million in revenue for the Corporate Fund Tax (city’s general operating fund).” According to an Emanuel press release, that will provide:

• 27,000 youth after school opportunities

• 25,000 summer job opportunities

• 5,500 pre-school slots

• Open 15 new early learning centers at Chicago Public Library Branches

• Expand city services by adding 5 more baiting crews and 10 additional tree trimming crews to eliminate the backlog

• Affordable housing for senior-citizens and transit for accessibility

And while the Mayor’s office touts the benefits of the budget, Stanley warns of the negative impacts to the

Black community. “A property tax hike will have a negative impact by raising the tax bills for homeowners and, most likely, landlords will shift the cost to renters.”

“Senior citizens who are living on a fixed income most likely cannot handle the pressure of additional bills. Working black families who have not received a raise in years are expected to handle the financial burden of annually increasing taxes, garbage fees, and taxi or ride sharing fees on top of their household expenses,” she continues.

But she also shared the impacts that Mayor Emanuel hopes will benefit the Black community directly, including, “after-school opportunities and wrap around services for youth.” “Mayor Emanuel is restoring 5,500 pre-school slots that Governor Rauner slashed from the Child Care Assistance Program (CCAP) last summer.”

She also says in the current budget, “Emanuel will also move more police officers to the beat from the desks which means safer streets essentially. Communities plagued with gun violence should receive a stronger police presence in impacted neighborhoods. New officers to the beat, (but those) officers should receive sensitivity and cultural training beforehand.”

Regardless, Emanuel and the City Council have done the heavy lifting that they hope will get Chicago on the proper fiscal course. “Four years ago we began charting a new course for Chicago’s future, and with today’s vote, we took a big step toward finally finishing the job,” said Mayor Emanuel. “I want to thank the members of the Council who voted to take decisive and determined action to right our financial ship and put progress ahead of politics. We have a lot more work to do and I look forward to continuing working together to create jobs and ensure the economic opportunities reach every neighborhood of Chicago.”

Chicagoans will have 3 1⁄2 years to decide if we are headed in the right direction or if we should change course. Emanuel is betting $588 million dollars, his job, and the careers of quite a few city council allies on it.